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Strategic Management
Strategic Management
Differentiation Strategy
The differentiation and cost leadership strategies seek competitive advantage in a broad
range of market or industry segment.
The differentiation focus and the cost focus strategies are best used in niche market.
It helps the firms to compare their performance within its industry to determine whether a
firm's profitability is above or below the industry average.
Porter warns that companies who try to
accomplish both cost leadership and
differentiation may fall into the "hole in
the middle". A company's scope can be
either focused (providing its products to
specific parts of the market) or industry-
wide (selling its products to a wide range
of market sectors). The generic strategy
reflects the choices made in terms of both
the type and breadth of competitive
advantage. Michael Porter first described
the concept in 1980.
AUTOMOBILE INDUSTRY
The automobile industry includes a diverse range of businesses and organisations involved in
the design, development, manufacturing, marketing, and sale of automobiles. It is one of the
world's most profitable industries.
In the 1860s, hundreds of manufacturers pioneered the horseless carriage, launching the
automotive industry. The United States led the world in total automobile production for many
decades. Before the Great Depression, the
world had 32,028,500 automobiles in use,
with the United States producing more than
90% of them. At the time, the United States
had one car for every 4.87 people. After 1945,
the United States produced roughly 75% of
the world's auto production. Japan overtook
the United States in 1980, but the United
States regained the world lead in 1994. Japan narrowly surpassed the United States in
production in 2006, a position it held until 2009, when China overtook Japan with 13.8
million units.
Manual assembly by a human worker was used in the early days of automobile
manufacturing. From engineers working on a stationary car to a conveyor belt system where
the car passed through multiple stations of more specialised engineers, the process evolved.
Beginning in the 1960s, robotic equipment was introduced to the process, and most cars are
now manufactured primarily with automated machinery.
For many developed economies, the automobile is the primary mode of transportation. The
Boston Consulting Group's Detroit branch predicted that by 2014, the four BRIC markets
would account for one-third of global demand (Brazil, Russia, India and China). Meanwhile,
the automotive industry in developed countries has slowed. This trend is expected to
continue, especially as younger generations (particularly in highly urbanised countries) no
longer want to own a car and prefer other modes of transportation. Iran and Indonesia are
two other potentially powerful automotive markets. Emerging automobile markets are
already purchasing more vehicles than established markets.
Cost Leadership Strategy
When a company projects itself as the cheapest manufacturer or provider of a specific
product or commodity in a competition, this is referred to as cost leadership. It is difficult to
implement the strategy because management must constantly work to reduce costs at all
levels in order to remain competitive.
It is a component of marketing strategy Although it is extremely effective at gaining market
share and attracting customers' attention, it is difficult to implement. The company's
management team must constantly work to reduce the cost of not just one product, but the
entire range of products in the company's portfolio. Cost leadership does not imply that a
company produces goods of inferior quality at comparatively low prices.
FOR EXAMPLE:
VOLTFRACTION
Voltfraction is home to High School and College & Youth eSports.
It was started by a 20 years old Entrepreneur Mr. Sanskar Raj
(CEO) along with their 4 collegemates.
VOLTFRACTION
CHALLENGES FACED
It is relatively fresh industry and most of the people still don’t know much about this. During
the game’s tournament, despite having a good connectivity, they still find glitches during the
game which is the major drawback. Their server also got crashed during one of the
tournaments.
STRATEGIES
They have targeted mostly on colleges students. They collaborated with renowned colleges
starting with Engineering colleges like DTU, IIT ROORKEE, etc.
During lockdown they even collaborated with international E-sports community and even get
cash price which help them to get more funding.